Thursday, August 29, 2013

Customer targeting and segmentation analytics

This article excerpt from IntelligentUtility written by my Jayhawk friend Christine Richards has some good points and some not so good points. I hope that the full report gets into the details that I am suggesting below. Let me elaborate on the conversation and help educate the masses.This is nothing new. Utilities have been doing this for a long time. That is how their pricing rates are created. Utilities are pricing experts by demographic data (low income, churches, schools, elderly, etc).Most generalizations about the Electric Utility industry are useless. Especially, customer marketing and customer segmentation generalizations. Why? Because there is no one single US Electric Utility Market. The market is segmented into 50 states in the continental US. And within each of those 50 markets, there are IOUs (Investor Owned Utilities), MOUs (Municipality Owned Utilities), and COOPs (Cooperative Owned Utilities).Those utilities behave differently due to their ownership and they have different market operating rules by law. Furthermore, some markets have energy retail competition and some don't. So for example, the customer segmentation and customer marketing sophistication that one can witness in the energy retail competitive electrics markets (Connecticut, District of Columbia, Illinois, Maryland, New Jersey, New York, Pennsylvania and Texas) would be totally different than the one exercised in non-competitive markets.So, it would be much better to have a real analysis done within the different markets that can be compared and contrasted to learn from. Do a price study in the Texas competitive market and publish the results. I guarantee that everyone will be amazed with your findings, as the Texas competitive market has been doing phenomenal things since it launched in 2002.

Location, Competition and Innovation are the only three driving forces for better customer segmentation and customer marketing within Electric Utilities. Without focusing on them, the analysis is truly meaningless to the practitioner.Andres

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Customer targeting and segmentation analytics

Excerpts from our just-released publication

Today, I wanted to share some snippets from our hot-off-the-virtual-presses Customer targeting and segmentation analytics industry briefing. In this report, we discuss how it isn't about just satisfying utility customers as a group, but satisfying customers as individuals. That's a big change for many utilities, but fortunately customer targeting and segmentation analytics can help with that transformation. This report provides a snapshot of where utilities are at today with their customer targeting and segmentation analytics, as well as what's ahead. In this article, we pull out just a few highlights, like defining customer marketing, targeting and segmentation, and discussing the state of customer marketing and segmentation efforts.

Defining marketing, targeting, segmentation

In our Institute discussions, as well as one of our working group titles, we use the description of "customer marketing and segmentation." In the report we get a little bit more specific and talk about "customer targeting and segmentation." With this change, we thought it would be helpful to quickly review the differences between marketing, targeting and segmentation. Our analyst, Kim Gaddy, developed these base definitions.

Customer segmentation

Customer segmentation is the process of dividing the customer base into groups based on common characteristics. These characteristics include:

Age

Gender

Income level

Location

Interests

Participation in specific rate plans or programs

Level of engagement

Payment behaviors

Preferred communications channels

Segmentation efforts range from those that are focused on managing the overall utility-customer relationship to very specific segmentation efforts designed to support the marketing of a particular product or program or the prioritization of credit and collections efforts. The benefits of segmentation also extend beyond customers. For example, segmentation of buildings can be a valuable input for a utility's energy efficiency strategy.

Customer targeting

Customer targeting is the process of applying customer segmentation to specific marketing initiatives or campaigns. Some campaigns may target more than one customer segment. The idea is to improve marketing efficiency by focusing marketing efforts and resources on those customers most likely to, for example, benefit from a particular product, enroll in a particular program, or pay an outstanding balance.

Customer marketing

Customer marketing involves a number of components and encompasses both customer segmentation and customer targeting. In general, customer marketing includes four elements, the 4 P's of marketing:

Product | This includes product concept, selection, defining the value proposition and product development

Price | Determination of a product's price

Place | Selection of the distribution channels that will be used to reach customers

Promotion | The design and execution of a promotional strategy

How utilities are using targeting and segmentation analytics

Now let's see what utilities are actually doing with targeting and segmentation. In this article, we'll share just a smidge of the results from our customer marketing and segmentation working group survey, including targeting and segmentation status and resources, customer criteria usage and segmentation usage.

According to utility survey respondents, most utilities have some segmentation/targeting framework in place. And this is all happening in spite of the fact that 93% of our respondents haven't developed a business case surrounding segmentation and targeting.

As far as where these frameworks are developed and managed, many different groups are involved in the effort. Of the most frequently mentioned responses, about 67% of respondents said their market research departments are involved and another 50% said their customer marketing departments participate in the effort.

So we know about a few of the groups involved, but what about the people involved? How much time are they spending on customer targeting and segmentation efforts? We found that most utilities have more than a couple of folks working of these efforts. About 31% of utilities have two to five FTEs, and 31% have five to nine FTEs devoted to this work. Utilities are definitely dedicating resources to developing and maintaining customer targeting and segmentation.

Alright, so we've covered some basics with customer targeting and segmentation efforts. Now let's look at how utilities are applying some of that targeting and segmentation work. The first area we'll explore is what are the most-often used criteria by utility companies. When looking at all customers, key criteria used by utilities include past participation in utility programs, customer location, consumption patterns and demographics. If we dig into different customer types, the criteria can vary. For example, we found that criteria for residential customers focus more on rate class, geography and program participation, whereas the top commercial customer criteria include consumption, firmographics and rate class.

Now let's see how this segmentation and targeting information is being used by utilities. In terms of departments using segmentation and targeting information, we found that there are a ton of groups leveraging this information-from engineering to finance. The top departments, however, include marketing/market research, public affairs, product/program management and customer service. The top ways in which these departments are using this information include conservation/usage awareness, customer satisfaction research, message development and customer use patterns.

Another way to look at usage is to look at how segmentation and targeting information can help utility companies shape and deliver their programs and educational materials. Top programs and materials that benefit from this information include special billing, energy efficiency/water conservation, self-service, and different payment options.

And that's just a smidge of what we covered in the report. If you'd like to learn more details about our Customer targeting and segmentation analytics publication, please contact me and I'll be happy to provide you with more details, or you can go directly to ourresearch report page.

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Andres Carvallo BIO

Andres Carvallo is an award winning engineer, speaker, author, and executive. Andres is globally recognized by the IEEE as one of the early developers of the smart grid concept and technology. Andres championed Austin Energy's industry leading smart grid program design and implementation from 2003 – 2010 and he architected the Pecan Street Project in 2009. Andres co-authored the best selling book "The Advanced Smart Grid", has received 34 industry awards since 2005, and is a popular speaker and guest lecturer. Andres is currently the EVP of Energy Solutions and Chief Strategy Officer at Proximetry. Andres has over 27 years of experience in the Energy, Telecommunications, Computer and Software industries. Andres has held since 1992 P&L responsibilities and senior executive titles while being responsible for the strategy, development, and commercialization of over 40 products at six start-ups and leading global companies like Philips Electronics, Digital Equipment, and Borland. Furthermore, Andres started his career as a product manager for Microsoft Windows in Redmond, WA.

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How to Run IT as a Business?

It all starts with my focus on the customer as the center of the lifecycle. The Lifecycle rules a discovery, planning, and maturity model process that orchestrates a framework. The framework, called RunITbiz, is made out of the 12 critical elements for Running IT as a Business. The elements are rationalized into demand and supply modules. At the core of the RunITbiz framework is a Service Oriented Architecture that leverages all legacy systems while powering new systems built on new open standards (Web Services, XML, BPEL, etc) including cutting edge Web 2.0 tools (Blogs, Wikis, AJAX, RSS, etc).

My RunITbiz Framework has two main modules. One module focuses on Managing IT Demand as a Business and the second one on Managing IT Supply as a Business. Each module has six critical elements to master. Here are the modules and critical elements:

Running IT Supply As A Business: 7. Enterprise Architecture, 8. Vendor Management, 9. Process Management, 10. Project Management, 11. Service Management, 12. Quality ManagementI wish you great success in your transformation. And if you have any questions, don't hesitate to reply to any post in this blog or contact me.

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Top 20 Geek Blogs

1) Lifehacker - http://www.lifehacker.com/ - Lifehackers' motto says it all: "Don't live to geek, geek to live." This blog offers timesavers of just about every stripe, from Firefox shortcuts to tips from the "Getting things done" faithful.

2) IT Toolbox Blogs - http://blogs.ittoolbox.com/ - IT Toolbox has a number of "in the trenches" IT pros who talk about technology and management issues. There are specialist blogs dealing with security, databases and project management, among other subjects. It's a versatile site.

3) Valleywag - http://valleywag.com/ - Bring in the noise, bring in the snark. Valleywag is for those who believe that the tech industry lives or dies by the scuttlebutt pinging around Silicon Valley. And it's amusing for those of us who prefer that the lotus-eaters of Northern California stick with the dishing and tongue-wagging, leaving the rest of us to get the real work done.

4) Kotaku - http://kotaku.com/ - Kotaku is the snarky, gamer uber-blog. It has everything from reviews and gossip to cheat tips. Just about anything you'll ever need, including which game to buy and how to play it.

5) Danger Room - http://blog.wired.com/defense/ - Wired's military and defense blog writes about some of the coolest and scariest military technologies -- not to mention scandals, debates and other military news. Lots of video and imagery are included.

6) Gizmodo - http://gizmodo.com/ - Gizmodo's got the scoop on all the latest toys and cool and wacky inventions -- from high-def TVs and coffee makers to booze belts and USB drives. You've got to love a site that publishes photos of a solar-powered bathing suit. Yeah, they also blog about serious technology news too.

8) Techdirt - http://www.techdirt.com/ - Techdirt is a newsy, "tell it like it is" blog that frequently features debates on the hot issues in the Internet and computer fields. Scandals are a specialty. Simplicity is its hallmark.

9) Groklaw - http://www.groklaw.net/ - Groklaw's raison d'etre is needling SCO in its long-running patent fights against IBM and Novell, but the discussion sometimes veers toward other issues that involve technology, intellectual property, and government regulations.

10) Hack a Day - http://www.hackaday.com/ - Want to learn how to add USB to a cheap Linux router? Create a snake robot? How about an XBox 360 laptop? Hack a Day has these basement projects and many more. This site is for the serious techie. At the same time, it's good for a laugh or a new hobby.

11) Engadget - http://www.engadget.com/ - As Coke is to Pepsi, so Engadget is to Gizmodo. It's all about gear, gossip, techish issues and the occasional rant. It's got great product photos, and the editors have access to pre- and early-release gadgetry. Also, some really funny home-made junk. But we prefer Gizmodo.

12) Feedster - www.feedster.com/feedpapers/Technology - Like drinking from the hose. This Web page brings together blog sites about technology, sports, celebrity gossip, food, personal experiences -- you name it. It also offers a blog search feature that allows you to input words or phrases, and it has a very cool RSS aggregator for news feeds. It also injects some great humor into technology news. An all-around great site.

13) Forever Geek - http://forevergeek.com - Forever Geek is a great site with a myriad blogs on diverse topics, from technology and general interest news to movie and game reviews. Definitely a geek paradise. If you want to learn about the upcoming Iron Man movie or read a review of Photoshop CS3, this is the place to go.

15) Smorgasbord - http://www.smorgasbord.net/ - Billed as a site for gadget- and game-loving geeks, this blog also serves up articles that cross over into the political and celebrity news of the day. The combination of entertainment value and tech news make Smorgasbord a top contender.

16) The Unofficial Apple Weblog (TUAW) - http://www.tuaw.com/ - TUAW offers collection of independent bloggers -- that is independent but not undecided or uninformed. It's a good source for Apple-related news. The only reason it didn't make the top 15 was its singular topic focus.

17) Elliot Back's blog - http://elliottback.com/wp/ - A self-professed computer scientist, Elliot posts everything from his opinions on why XML sucks, to the Titanic's passenger list and reviews of movies like 300. This site is diverse and well composed, offering great tips on topics such as increasing system performance and blocking spam.

18) Ed Foster's Gripelog - http://www.gripe2ed.com/scoop/ - There is a new crop of blogs that highlight poor customer service for consumer electronics, bad UIs and outright rip-offs, but Ed Foster has been doing it longer than anyone else. Check out these recent topics: Defective DRM, tricky warranties on plasma TVs and bad mobile phone service.

19) Gadgetell - http://www.gadgetell.com/ - This is a great site if you want to get the latest gadget and game news along with some topical opinion pieces.

20) 4sysops - http://4sysops.com/ - This is a very useful with well-written tips and how-to's for Windows admins.

About Proximetry

Proximetry develops and commercializes AirSync™, a comprehensive communications network and device management software platform for the energy industry. AirSync delivers secure, scalable, closed-loop control, and policy-based management of devices to build and manage large complex networks built upon multiple vendor platforms that incorporate a vast array of communications technologies. AirSync™ provides the essential tools for energy organizations to provision and manage mission-critical devices and networks. Founded in 2005, Proximetry is privately held, headquartered in San Diego, California, and backed by Munich Venture Partners, Aeris Capital, Investec, and Rembrandt Venture Partners. For more information, please visit www.proximetry.com

Siemens on Proximetry

"The challenge to monitor, control, and manage millions of communicating grid devices from multiple vendors continues to grow dramatically as grid modernization drives usage of a few thousand devices to tens of millions,” said Thierry Godart, president of Siemens Smart Grid Division North America. “Our partnership with Proximetry will allow utilities to better manage this vast proliferation of information and make strides in improving grid reliability.”

Itron on Proximetry

"We believe that Cisco and Proximetry’s joint work to integrate dynamic performance management across multiple network technologies is great evidence that the Connected Grid Ecosystem continues to mature positively. Our common vision of a truly open, interoperable suite of offerings that build off of each other will be a success for utilities and consumers alike. It’s not more of the same,” said Simon Pontin, Chief Technology Officer at Itron.

Cisco on Proximetry

“Cisco is pleased to be working with Proximetry and the AirSync solution, which complements the Connected Grid Field Area Network solution with enhanced RF management capabilities. As a key member of the Connected Grid ecosystem in the Cisco Developer Network, AirSync extends the visibility in the Field Area Network GridBlocks with unique performance management capabilities”, said Jennifer Lin, Sr. Director of Product Marketing from Cisco’s Connected Energy Networks BU.

Why is AirSync Better?

1) ALL other NMS/OSS products in the market use only SNMP to provide monitoring and alarms for devices, AirSync supports SNMP and it also uses a lightweight protocol (pre-CoAP) to manage devices with closed-loop control and policy-based functionality via an agent. AirSync’s pre-CoAP protocol solves the disadvantages of SNMP for the Smart Grid (i.e. too chatty, non-stop polling, and no integrated firmware management).

2) All other NMS/OSS products are focused on telecom WAN management only (i.e. routers, switches in telco domain) while AirSync can manage the WAN and its elements, it also can go deeper into the FAN, LAN, and PAN (including the AMI network). Furthermore, AirSync manages all devices hanging on those networks(e.g. electric/gas/water meters, inverters, IDEs, RTUs, Programmable Logic Controllers, premise gateways, premise routers, and sensors in general). It is important to note that All other NMS/OSS products in the market do not manage smart meters and/or any sensors on the edge of a FAN, LAN, or PAN, but AirSync does.

3) All other NMS/OSS products in the market do NOT provide any firmware management capabilities or if they do it is very limited. And they DO NOT support FANs, LANs, and PANs. And they DO NOT provide closed-loop control of any edge devices from any vendor on any network using any topology. AirSync delivers all of the above.

4) AirSync has unique features to manage ALL networks with many configurable enhancements like shaping the traffic and QoS management by having an agent on the device side unlike All other NMS/OSS products in the market which depend only on SNMP and lack such an ability.

Bottom line: All other NMS/OSS products in the market deliver only classical and limited WAN NMS/OSS capabilities. AirSync delivers all that far better and it can also support FAN/LAN/PAN/device/firmware management functions and help manage deeper into all the networks. AirSync has a well-defined NBI that can be used to interface with any NMS/OSS and provide the utility with an integrated management system with the utility's preferred GUI but with all the advantages of AirSync.

Bottom line: All other NMS/OSS products in the market deliver only classical and limited WAN NMS/OSS capabilities. AirSync delivers all that far better and it can also support FAN/LAN/PAN/device/firmware management functions and help manage deeper into all the networks. AirSync has a well-defined NBI that can be used to interface with any NMS/OSS and provide the utility with an integrated management system with the utility's preferred GUI but with all the advantages of AirSync.